- Eric Salama, the head of WPP's data and market research division Kantar, has been in talks with banks and private equity firms about a potential buyout of the unit for $4.8 billion, a development that comes in the wake of WPP CEO Martin Sorrell stepping down earlier this month, Reuters reported citing a report in the British newspaper The Times.
- In related news, WPP's digital chief Mark Read will join his co-chief operating officer Andrew Scott, as well as finance director Paul Richardson and executive chairman Roberto Quarta, during the company's Q1 earnings call on April 30, per Reuters.
- Sorrell's pay dropped 71% in 2017 for a total of 13.9 million pounds, according to figures from the ad giant's latest annual report detailed in PR Week. It was the lowest figure since 2011, when he earned 11.9 million pounds.
WPP's next chapter is starting to come into focus following Sorrell's exit from WPP after 33 years with the company. It's a future where digital is likely to play a more visible, as evidenced by Read's expected appearance on today's earning's call. A permanent replacement for Sorrell has not been named, but Read, who's been with the company since 1989, is being touted as a leading internal candidate, according to Reuters. In the meantime, Sorrell's pay drop suggests that former CEO's role at the company was showing signs of strain for a while before his departure.
While WPP has publicly resisted talk about a possible breakup in the wake of Sorrell leaving, the possible Kantar buyout falls in line with many analysts' predictions that the company would be split into smaller entities. Last week, Ford dealt a blow to WPP with the announcement that it's putting its advertising account up for review. Ford has been a top WPP client for decades, generating more than $500 million in annual revenue for the agency holding group.
The past few years have been a difficult time for traditional ad agencies that face a number of challenges, including digital disruption, evolving consumer demands and more competition from newer marketing services providers such as consultancies. Several large brands, including Procter & Gamble, are starting to bring more marketing functions in-house to save money, have more control over creative and better measure ROI of their marketing spend.
No matter who replaces Sorrell, he or she will have a tough job ahead. Along with Ford's plans to move its ad business, other major brands, like Unilever and P&G, have reduced their marketing spending. WPP reported flat like-for-like, top-line growth in 2017, along with flat operating margins and profits and a 5.4% drop in like-for-like billings. It was the company's worst performance in almost 10 years.
Correction: In a previous version of this article, the buyout amount was misstated. It is $4.8 billion.